Gartner, Inc. (IT) estimates that today only 3 percent of smartphones and 2 percent of tablets run Windows. Microsoft is currently in third place in each market.

But going free could change that.

Mr. Nadella, who rose up at Microsoft as a cloud computing star, indicated that the cloud will be a key part of Microsoft's strategy going forward. He states:

We are going to innovate with a challenger mindset. We are not coming at this as some incumbent trying to do the next version of Windows, we are going to come at this by innovating in every dimension.

Our vision, simply put, is to thrive in this world of mobile first, cloud first. Our goal is to really build platforms, create the best end-user experiences, the best developer opportunities and IT infrastructure for this ubiquitous computing world.

Key components of that cloud strategy include natural language processing and cloud storage. Microsoft announced the personal assistant Cortana at BUILD, which is currently in beta. Significantly smarter than Apple, Inc.'s (AAPL) current model Siri assistant, Cortana's advanced abilities to understand rather abstract queries heavily leverages Microsoft's cloud computing prowess. Likewise Microsoft's recently announced OneDrive is gunning for Google Inc.'s (GOOG) Google Drive and other storage services like Box.

"This is about the Internet. Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis